President Donald Trump would like to offer migrants who want to work in the U.S. a "gold card," akin to a green card, with one significant difference: the price tag. A gold card would cost $5 million, compared with government fees of $235 for a green card.
It's a good idea, both for government revenue and wealthy prospective immigrants. But the U.S. would have to be careful not to foreclose other, more affordable ways for people to work and live in the country.
Trump estimates the U.S. could sell 1 million gold cards, which would give holders quick residency rights and a path to citizenship, family members included. That would bring in $5 trillion. He also suggests that many companies would buy them to bring in talented workers. Even if his estimates are overly optimistic, some real money is on the table.
Current law allows a path to residency and citizenship by investing in the U.S. through the EB-5 program. After expenses are accounted for, and depending on details, the cost is about $1 million. That's an 80% discount on a gold card, and meanwhile the government gets the benefit of new jobs added to the U.S. economy.
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The Trump proposal is intended to replace this program, which has been criticized for fraud and abuse. Charging a flat fee may be better than requiring a certain amount of investment, because it will be clear a person has paid up and not concocted dubious job-creation schemes. The gold card may involve some of the same problems as the EB-5 program in terms of being an easy way for spies and potential terrorists to enter America, but it's unlikely to make them worse, and at least the price would be higher.
Economists have long entertained the idea of selling the right to immigrate. It would help the U.S. meet its fiscal obligations while offering residency to those who value it most, at least when defined in monetary terms.
As usual, the devil is in the details. Trump's proposal could work out well, or it could severely damage the nation.
One worry is selection effects. The $5 million fee means the program would skew toward older people and would probably also skew somewhat male. Neither of those biases is a problem if other methods of establishing residence remain robust. But will they?
With a gold card program, the government would have a financial incentive to limit other ways of establishing residency. You can get an O-1 visa or an H-1B, for instance, if you have a strong record of accomplishment or an interested employer with a proper priority and perhaps some luck. Neither of those options costs anything close to $5 million, even with legal fees. Not everyone with a spare $5 million can get an O-1, or a proper job offer, but still: At the margin, these options would compete with each other.
These other options are well-suited for getting young, talented people into the U.S., which is precisely the weakness of the gold card proposal. Ideally the U.S. would expand these other paths, but with a gold card program they might be narrowed so the government can reap more revenue from sales of gold cards.
A young person entering the U.S. on an O-1 -- which is for "the individual who possesses extraordinary ability in the sciences, arts, education, business, or athletics" -- may well start a company or do groundbreaking research. But the fiscal payoff from such successes can be decades down the road. The $5 million, in contrast, would be deposited in government coffers immediately.
The best-case scenario is that the U.S. offers a gold card and expands (or at least does not limit) cheaper ways of getting into the country.
The less favorable scenario is that the federal government gradually eliminates or curtails cheaper options for establishing residency.
The concept of a gold card is a good one. But a lot depends on the execution.
Cowen is a Bloomberg columnist and professor of economics at George Mason University.
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